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The HUD OIG audited Public Housing’s oversight of physical conditions. This audit includes insight into the shortcomings of REAC Inspections, HUD Field office oversight, and PHA’s self-inspections. Many issues cited on REAC inspection follow-up will be addressed with the implementation of NSPIRE, but the issue of consistent oversight of PHAs remains unaddressed by NSPIRE.

OIG Finds the HUD Lacks Proper Oversight of Inspection Corrections

Much of the OIG’s audit focuses on oversight of corrections of issues identified on REAC Inspections. The current requirements only require reporting of life-threatening issues’ corrections, which represent only seven deficiencies. All the remaining deficiencies do not require any reporting to HUD REAC, and there is no requirement for oversight by HUD field offices. From the OIG audit:

HUD does not have a standardized policy or nationwide protocol to guide how its field offices should conduct oversight of PHAs’ unit conditions because each office should have its own policies and procedures … As a result of HUD’s not having consistent processes for its field offices to oversee PHAs’ corrective actions for both life-threatening and non-life-threatening deficiencies, HUD lacked assurance that PHAs corrected the deficiencies, and tenants may have been exposed to units that were not decent, safe, and sanitary.

What is the Root Cause of Physical Non-Compliance?

In the experience of US Housing Consultants, a good percentage of self-inspections are little more than wish fulfillment. You don’t want anything to be wrong, so you see nothing wrong. The OIG audit says, “Without clear guidance regarding its requirements for self-inspections, HUD lacked assurance that PHAs properly performed self-inspections of public housing units to determine maintenance and modernizations.

Scott Precourt, the founder of US Housing Consultants, shared insight on PHA internal inspections.

“The OIG’s critique of a lack of standardized policies at the HUD field office level is well founded. However, the OIG misses what we see every day as the root cause of many issues, which is a lack of quality on internal self-inspections,” Precourt says. “When US Housing Consultants is contracted by a PHA, we are often following another vendor or the PHA’s own staff inspections, and we routinely find that our inspectors discover somewhere between 200-300% more issues than the preceding year’s inspections. In one such case this year, we increased the average number of findings per unit from two per unit to twenty-eight per unit.”

For more than 20 years, PHAs have been contracting low-bid, low-quality UPCS Inspections, which find the bare minimum number of issues. Vendors hire subcontractors who are paid by the unit, which creates an incentive for the contract inspectors to work quickly and not necessarily with quality or attention to detail. Alternatively, inspections are done by the same maintenance staff responsible for the work orders– which is fundamentally flawed because of a lack of objectivity. If self-inspections are key to PHA physical compliance, procurement of annual self-inspections needs to be adjusted to view quality as the true value instead of just hiring the lowest bidder.” 

Sometimes a low price is a great value, and sometimes it’s just cheap. PHAs should look at annual inspection procurement and ask how the inspectors are paid for their time. Are the inspectors trained, insured, dedicated employees, or are they freelancers with no incentive beyond “Hey, it’s a gig?” Is there any quality assurance for the contract inspectors? What happens if there are so many issues that the inspector cannot finish in the scheduled timeframe? Do they just rush through the rest?

What’s Next for Physical Compliance in Public Housing?

The OIG audit clearly indicates that HUD asset management needs to create a consistent approach to oversight of physical conditions. Moreover, the underlying implication here is that no matter how good REAC inspections might be – they can’t be the only oversight of physical conditions. It will take a standardized approach from HUD field offices and PHA self-inspections which identify all issues, including long-term capital issues, health and safety, and routine maintenance.

Scott Precourt is the Managing Partner and Founder of US Housing Consultants.